Costco Case

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Executive Summary

Jim Sinegal and Jeff Brotman in Seattle Washington founded Costco Wholesale in 1993. Costco merged with Price Club, and doubled their market share in the wholesale industry. They became an immediate leader in the industry. Costco's sales model is to sell a wide variety of products for low prices at a high volume. These brand-name products are sold at a discounted price to their members. Customers of Costco must pay a membership fee in order to purchase their merchandise. Their focus is on customer satisfaction and a guaranteed low price for its members. They have managed to maintain a large customer base using this balance where both small business and personal needs can be met simultaneous.

Problem Statement

Costco could increase their shareholders return on investment by making changes to their business model. They are currently doing favorably with their customers and employees, but need to maximizing their potential and increase revenue. Costco seeks to increase more of the market share in the industry from Sam's Club, their largest competitor. This can be accomplished by continuing with their growth strategy to open more warehouses, increase their membership, and to upgrading their merchandising techniques to motivate members to shop more often.